What happens if a robo-advisor goes bankrupt? - Seedly
 

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Asked by Anonymous

Asked on 15 Jan 2020

What happens if a robo-advisor goes bankrupt?

I have contacted Stashaway but I'm not convinced by their response.

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Tai Zhi
Tai Zhi
Level 6. Master
Answered on 30 Jan 2020

I work for AutoWealth. To provide the highest safeguard to you, your assets and monies will be held in a personal segregated custody account in your legal name. In this arrangement, only you have legal beneficial ownership over the assets and monies.

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Komal Krishna
Komal Krishna

30 Jan 2020

Thanks for the response. I have an active portfolio in Autowealth too.
Amanda Ong
Amanda Ong, Head Of Client Engagement & Pr at Stashaway
Level 4. Prodigy
Answered on 17 Jan 2020

Hi there,

Just jumping in to provide more clarity or assurance on your bankruptcy concern.

Other that the below answer provided by my colleague, I do also want to highlight that as a Capital Markets Services License holder, we also have what is known as a minimum capital requirement.

We have to ensure that this minimum capital base in always in place i.e preventing us from potentially running out of cash on a daily basis. If it dips below that amount, MAS will require us to stop operating temprorily until we top it back up to the required amount.

We are also subject to multiple internal and external audits that have to all be submitted to MAS. These audits ensure we have the right controls and processes in place to prevent a banktruptcy event from happening.

However, if we do declare bankruptcy, then you can be assured that MAS will require that we take the necessary steps to ensure that our clients' interest is the main focus on the procedeeings.

As mentioned, your funds are completely unmingled from ours and we are not allowed to make use of it at any point in time. At the end of the day, the funds and securities in your portfolio will be kept custodial accounts and this is also the case with some of the largest fund managers who also hold the CMS license for Retail Fund Management.

If you'd like, I am happy to discuss it further over a call at +65 6248 0889 or drop us an email at [email protected] (addressing it to me), and I can address any specific concerns you may have.

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Komal Krishna
Komal Krishna

30 Jan 2020

Thanks for the response. I have an active portfolio in Stashaway.
Wilson Nid A Break
Wilson Nid A Break
Level 8. Wizard
Answered on 15 Jan 2020

Share their response here?

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Question Poster

15 Jan 2020

But it was not mentioned how long it would take them to refund the investments in case of bankruptcy. As per my financial advisor, it takes a lot of time for the custodian bank to settle the amounts for all the investors.
Wilson Nid A Break
Wilson Nid A Break

15 Jan 2020

I personally wont worry too much, I invest in Autowealth and i think its same/similar arrangement with SAXO (brokerage) and HSBC (custodian). So your investment is separated with that of the robo-advisors's monies, you just dont have immediate access to your investments in the worst-case scenerio. When it comes to investments, there's always some risk here & there. As long the risks had been identified and appropriate measures had been put in place, you just simply had to live with it. If you are really worry, then spread your robo-advisers' contribution across at least 2 platforms. If you are still worried, then there's nothing can be done to assuage your fears, might as well just move on to other investment tools, life is a game of trade-offs.